29 Jan

Gas Flaring Law Error Cost Nigeria Billions of Dollars

Africa’s top oil producer plans to make gas flaring more costly for companies that have escaped the payment of billions of dollars despite being fined, Nigerian Finance Minister Kemi Adeosun said.

In the “legal framework for the gas-flaring penalty, it was drafted as a charge. A charge is tax deductible,” Adeosun said in a Jan. 23 interview. “So, what do the international oil companies do? They flare, they pay the charge on which they get tax relief. That’s just bad drafting.”

The government is approaching lawmakers to amend the law and have the word ‘penalty’ replace ‘charge,’ the minister said in her office in the capital, Abuja. “Just that one word has potentially cost us billions of dollars.”

Oil companies flare natural gas that is produced along with crude instead of harnessing it because that can be costly or difficult for security reasons. Nigeria has sought to limit the practice over the years as it pollutes the environment and contributes to global warming.

Seeking Revenue

The West African nation is recovering from a contraction of its economy in 2016, the first in 25 years, and is seeking revenue sources to plug a $25 billion infrastructure gap and fund a record 2018 budget presented in December by President Muhammadu Buhari.

The government is also updating the tax law and going after defaulters, with the intention to boost collection and raise the country’s tax-to-GDP ratio, currently at 6 percent and among the lowest in the world.

Nigeria in the past never focused much on tax revenue because of its reliance on oil income that funds most of the government spending, Adeosun said. The OPEC member produced 1.8 million barrels per day in December, according to data compiled by Bloomberg.

Source: https://www.bloomberg.com/news/articles/2018-01-29/gas-flaring-law-error-cost-nigeria-billions-of-dollars

06 Apr

Things are not looking great for US – Africa relations under Trump

With US president Donald Trump closing in on his first 100 days in office there are early indications of what shape his Africa policy might take. They are not encouraging.

Since being sworn in the President has had the US’s overseas development activities in its sights. In February Mr Trump announced he was seeking a 37% cut to State Department and USAID budgets, threatening critical funding for international aid agencies.

Other initiatives to be targeted include the repealing of a measure to force oil and mining companies to publish payments to foreign governments and scaling back efforts to curb the conflict minerals trade.

The brunt of all this will be felt in Africa, which remains a major aid recipient. The administration’s pursuit of these changes at a time the UN is warning of the worst humanitarian crisis since 1945, and famine looming in Somalia, South Sudan, and parts of Nigeria, only reinforces the impression that Africa is not a priority.

The current mood is perhaps best captured by the news that a planned Africa trade conference at the University of Southern California recently had to be cancelled as none of the participants from the continent were granted visas.

More: Why Africa

10 Jan

Nigeria Reclaims Africa’s Top Oil Producer Spot

Opec

By Chineme Okafor in Abuja

Nigeria may have reclaimed its position as Africa’s top oil producer which it lost to fellow African oil producer, Angola earlier in March 2016.

According to the December 2016 Monthly Oil Market Report (MOMR) of the Organisation of Petroleum Exporting Countries (OPEC), crude oil production from Nigeria rose slightly above that of Angola even before the January 2017 planned production cut agreed by OPEC and non-OPEC producers.
Angola would be expected to cut about 78,000 barrels per day (bd) of its production in the agreement which was sealed in late 2016.

But secondary sources in the MOMR indicated that in November, Nigeria and Angola produced 1.692 million barrels (mb) of oil apiece. Similarly, information from primary sources in the MOMR stated that Nigeria produced 1.782mb of oil as against Angola’s 1.688mb to show its takeover of Angola by about 94,000bd.

“According to secondary sources, OPEC crude oil production in November increased by 151tb/d compared to the previous month to average 33.87mb/d. Crude oil output increased the most in Angola, Nigeria and Libya, while production in Kuwait and Saudi Arabia showed the largest decline.
“A new OPEC-14 production target of 32.5mb/d as per 1 January 2017 represents a reduction of around 1.2mb/d from October production levels,” said OPEC’s December MOMR.

Earlier in the year when Nigeria lost its position as Africa’s largest producer, its output fell to about 1.677mb, as against Angola’s 1.782mb then.

The development was made possible by repeated attacks on Nigerian oil infrastructure by militants in the Niger Delta. This dragged the country’s daily oil production down by about 700,000bd as reported by the Nigerian National Petroleum Corporation (NNPC) in July, and further confirmed by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu.
Though Nigeria is still far from recovering to its full capacity, it has also secured a production cap exemption from the rest of OPEC and non-OPEC members on the basis of the attacks on her oil infrastructure.

The Niger Delta Avengers, which is majorly responsible for the production disruption, claimed it was fighting for socioeconomic equality in the region. Although, the group and other militants in the region agreed to a ceasefire against further attacks in September 2016, they have however indicated their intentions to resume hostilities following their claims of government’s indifference to their demands.

While a committee responsible for monitoring whether the agreed upon cuts by OPEC and non-OPEC members are being made will meet in Vienna on 21 and 22 January to hash out a way to monitor compliance with the deal, Saudi Arabia, Kuwait, Iraq and Venezuela are already honouring the commitment to cut output.

 

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